U.S. stocks closed lower on Thursday following abrupt break-down of the summit meeting between President Donald Trump and his North Korean counterpart Kim Jong Un. Better-than expected fourth quarter 2018 U.S. GDP data also failed to boost investors’ sentiments. All three major stock indexes ended in the red. However, each of these three indexes preformed impressively for February as a whole.
The Dow Jones Industrial Average (DJI) closed at 25,916, declining 0.3%. The S&P 500 Index (INX) also decreased 0.3% to close at 2,784.49. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 7,532.53, shedding 0.3%. A total of 8.22 billion shares were traded on Thursday, higher than the last 20-session average of 7.34 billion shares. Decliners outnumbered advancers on the NYSE by 1.30-to-1 ratio. On the Nasdaq, decliners had an edge over advancers by 1.41-to-1 ratio. The CBOE VIX increased 0.5% to close at 14.78.
How Did the Benchmarks Perform?
The Dow ended in negative territory for the third successive day. Notably, 16 stocks of the 30-stocks blue-chip index finished in the red while fourteen ended in the green. UnitedHealth Group Inc. UNH was major loser with a loss of 3.1%. UnitedHealth Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 closed in the red for the second consecutive day. The Materials Select Sector SPDR (XLB) and Energy Select Sector SPDR (XLE) lost 1.2% and 1%, respectively. Notably, seven out of 11 sectors of the benchmark index closed in the red while four ended in green. The tech-heavy Nasdaq Composite finished in the red reversing its previous day’s gains, due to weak performance by large-cap stocks.
Breakdown of US – North Korea Presidential Meeting
The meeting between President Donald Trump and Kim Jong Un ended without any fruitful result as Trump left the meeting before signing any joint agreement between the United States and North Korea. The meeting took place on Feb 27 evening at Vietnamese capital of Hanoi.
The U.S. government wanted North Korea to opt for complete nuclear disarmament in exchange for a massive package to boost the latter’s economy. On the other hand, North Korea demanded removal of all sanctions imposed on them to compensate for the loss of the strategic benefits of weapons of mass destruction.
On Feb 28,White House spokeswoman Sarah Sanders said. "No agreement was reached at this time, but their respective teams look forward to meeting in the future." Notably, this was the second meeting between the two leaders in about eight months. The first meeting took place in Singapore.
US GDP Hits Target Rate in 2018
On Feb 28, the Department of Commerce reported that U.S. GDP for the fourth quarter of 2018 grew 2.6% (initial estimate). This figure was better than the consensus estimate of growth of 2.4%. However, the Bureau of Economic Analysis reported that annualized real GDP growth in 2018 was little more than 2.9%, slightly below the target rate of the government.
Better-than-expected GDP growth can be attributed 0.7% increase in consumer spending, which constitute more than 70% of the U.S. GDP. U.S. consumer spending was $13,044.25 billion in the fourth quarter of 2018 compared with $12,953.29 billion in the third quarter of 2018. Notably, consumer spending reached its all-time high in the fourth quarter of 2018, during the period of 1950 to 2018.
Other Economic Data
The Department of Labor reported that initial claims for jobless people increased 8,000 to a seasonally adjusted 225,000 for the week ended Feb. 23, reflecting the highest level in 10 months. The consensus estimate was 222,000. The number of people receiving benefits after an initial week of aid increased 79,000 to 1.81 million for the week ended Feb. 16, the highest level since April 2018.The four-week moving average of continuing claims grew 6,750 to 1.76 million.
After a fabulous January, Wall Street rally continued in February also. All three major stock indexes – the Dow, S&P 500 and Nasdaq Composite – gained 3.7%, 3% and 3.4%, respectively. Year to date, the indexes were up 11.1%. 11.1% and 13.5%, respectively. Several positive developments on trade war front, Fed’s decision to put aggressive interest rate policy on backburner and rebound of energy and technology sectors were major catalysts for U.S. stocks.
Stocks That Made Headline
ExxonMobil Hits Gas in Cyprus, Sees Reserves Growth in 2018
Exxon Mobil Corp. XOM recently announced the discovery of natural gas in Glaucus-1 well, located off the coast of Cyprus. (Read More)
Southwestern Q4 Earnings Miss Estimates, Reserves Fall
Southwestern Energy Co. SWN reported fourth-quarter 2018 adjusted earnings of 31 cents per share, lagging the Zacks Consensus Estimate of 34 cents. (Read More)
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